Vacancy Decontrol Evokes Opposite Visions of Future

New York Times, May 13, 1997

NEW YORK -- Under one scenario, the character of dozens of neighborhoods in New York City would be radically altered within a decade, as gentrification swept the poor and middle-class out of areas with the best schools, the best views and the least crime.

Under another scenario, the fabric of most neighborhoods would remain as stable as it ever has in such a crowded, protean city. Any big changes would take more than a generation, and developers would have more of an incentive to create new housing.

As Gov. George Pataki presented his plan Monday to phase out rent regulations by removing price limits when apartments become vacant, such were the extreme visions of the city's future under so-called vacancy decontrol offered by those on opposing sides of the issue.

But economists and urban planners suggested that the effects of Pataki's plan would probably be much more complex, with rents increasing substantially in only about a dozen neighborhoods around the city -- mainly in Manhattan -- as tenants in rent-regulated apartments move out.

That, however, could have an unpredictable ripple effect on rents in the rest of the city, recent studies indicate, as middle-class and poorer residents eventually get priced out of those neighborhoods and look elsewhere for lower unregulated rents, driving up demand in other neighborhoods. And at some point, the demand and the city's limited stock of affordable housing could collide.

"One thing that vacancy decontrol would most likely do over the long haul, as people move out, is lead to a decrease in housing opportunities for low- and moderate-income households," said Michael Schill, a professor of law and urban planning at New York University, who will release a study on Wednesday that shows which neighborhoods could be most affected by vacancy decontrol.

The study, written with Benjamin Scafidi Jr., a research associate at the Center for Real Estate and Urban Policy at New York University School of Law, identified neighborhoods where rents of regulated apartments were substantially lower than the market rate.

When regulated tenants move out, rents will likely rise in Riverdale, Soundview and Parkchester in the Bronx; Chelsea, Clinton, Greenwich Village and the financial district, Midtown, Stuyvesant Town, Turtle Bay, the Upper East and West Sides, Morningside and Hamilton Heights in Manhattan; and Bayside, Little Neck, Bellerose and Rosedale in Queens.

"You're probably going to have instances where people living in, say, Chelsea, have a family and decide they need to move out," Schill said. "And they're going to move to other neighborhoods, because they are not going to be able to attain housing at the old rent levels."

But landlords and owners have long contended that opponents of rent deregulation are overlooking an important factor when they present such theories. Phasing out the cumbersome regulations, they say, will spur construction of housing in a city where too few new apartments are being built or rehabilitated.

But Michael McKee of the New York State Tenants and Neighbors Coalition, the state's largest tenant group, predicted Monday that the effects of vacancy decontrol would be to virtually force the middle class out of Manhattan and destroy the unique character of New York.

"If you want New York City to be a vibrant, diverse community, with artists and writers and creative people, then rent regulation is a very important part of that mix," McKee said. "Without rent regulation, creative people will be gone."

Ronald Shiffman, director of the Pratt Center for Community and Environmental Development, said, "I think it will hurt New York City in ways that one can't even imagine right now. It's going to have a dramatic affect on the social and economic integration of many of our neighborhoods."

Tenant advocates, relying on statistics from the last time New York City tried vacancy decontrol, believe that changes could occur rapidly, with most apartments reverting to the market within a decade. From 1971 to 1974, about 400,000 apartments became deregulated as tenants moved out. There are about 1.1 million regulated apartments in the city.

But many economists think it will take much longer for apartments to turn over. "The notion that there are millionaires lurking out in the weeds waiting to take our apartment is a little far-fetched," said Frank Braconi, the executive director of the Citizens Housing and Planning Council. "Rents will look much like they do now in many parts of the city for a long time."

Copyright 1997 The New York Times Company